The WHAT and WHY of Ejidos - PART 2
By: Cheryl MIller, Broker, Baja Realty and investment
In Part 1 of this series, we discussed “What is an Ejido”, how they were established and the “Social land” they hold. In this part, we will delve into the possibility of purchasing Ejido land.
As was discussed in Part 1, Ejido property holdings are considered “Social Property” (comprising about 52% of the land in Mexico) where Ejido members enjoy use and enjoyment of the land designated to the Ejido group. We discussed how Ejido land cannot be sold unless it is privatized.
So, let’s examine this a little deeper.
Ejido land is further broken down into three categories.
Property that is held by the community and cannot ever be privatized –it is called “Uso Comun” or common use land. Many Ejido members hold Certificates for Use. This is very common in the agricultural zones, where individual farmers are given the right to use a piece of the larger Uso Comun land to farm or as ranch range land. If they do not exercise their right, technically, the Ejido can recind their Right to Use Certificate and assign it to another member. (I have had Ejido land agents tell me that they CAN sell Ejiditarian Uso Comun property to private parties and that they have done so in the past. This is simply not true. Consult a Notario and real estate attorney before agreeing to any land purchase of this type. It is possible however, for private parties to lease this land from the Ejido for up to 30 years.)
“Parcelas” which have “certificados parcelarios” (parcel certificates) are governed by agrarian or ejido law, owned or controlled by the entire Ejido membership until it is converted to private property titles through the “Dominio Pleno” procedure (quite complicated and lengthy) and it requires that all members holding a parcela certificates in that tract to agree to convert them to titled land. Certificados Parcelarios are NOT sellable to non-Ejido parties until private titles are issued. They can only be transferred to another Ejido member as a parcela. VERY IMPORTANT. This process, if even possible, can take years. My advice? Do not even consider a parcela as a purchase unless you have many lawyers, time and money to burn and do not care about risk. If just one Ejido member choses to not agree with its conversion to titled property, then entire exercise will have been in vain. This is a huge risk as technically it is NOT the PROPERTY of the individual parcela certificate holder so any agreement with him alone is not legally valid. Large corporations have done this in the past for resorts and developments, but for an individual, a retirement plot, or vacation home… it is not viable.
Solares: These are individual parcels of land that have been given to individual Ejido members in a legal title. It will have a “Titulo de Propeidad” with the Ejido members name on it and will have been issued from the Federal Government through the Agrario National Registry. It is then registered with the county catastro office and the public registry, all properly stamped. These parcels CAN BE privatized, as long as a Derecho al Tanto has been also issued prior to the private sale.
It is very important to have a Title Search performed on Ejido land, or have an Agarian attorney check the status of the individual parcel, the Ejido and any evidence of disputes between the Ejido and other Ejidos or private parties.
If the Ejido itself has not been properly acknowledged and registered in the Agrario National or has not been done the PROCEDE or “Program of Certification of Ejido Rights” procedure, there may be conflicts between other Ejidos regarding Ejido boundaries or individual privately held parcels. PROCEDE is a government procedure which upon the approval of the ejido, certifies the agrarian rights to land within the ejido. This is not an obligatory procedure and will only begin when the majority of the ejido agrees to enter into the procedure and the ejido does not have any legal conflicts that prohibit it from entering into the program, so it is not always perfomed.
There is also the Dominio Pleno processes which should be investigated by your consultant. A good Title Search agent or Agrarian attorney will be able to ascertain if the Dominio Pleano has not been done, or if any conflicts exist at the time of your purchase and advise you as to the legality of the Ejido itself and the status of their procedures.
Derecho Al Tanto:
For the first purchase of TITLED Ejido parcels, you cannot legally purchase the property until it has went through the Derecho Al Tanto or “First Right of Refusal” process. Any sale that has not underwent this process BEFORE the sale, can be invalidated. It will technically be considered still Ejido land and can, if legally challenged by the Ejido, the title holder or his heirs, be returned to the original Ejido title holder, his heirs or the Ejido itself. There are legal defenses you can submit that can be put forth based on the amount time of possession, but this takes a lot of time and money to defend and you may not win.
The Derecho Al Tanto Process requires applying to the Ejido, a tax and a market appraisal. This application is required to be posted for 30 days at the Ejido office, and then in a specified Ejido meeting (Asemblea), all members must vote in favor of allowing the sale of the property to a non Ejido party. Should any of those members wish to purchase the property himself, he has first right of refusal and your sale will not proceed. If the Asemblea does not ratify the Derecho Al tanto by a positive vote, your sale will not proceed.
A few years back, the Ejido law changed, and the law now allows the Ejido to charge a percentage of the sales price in order to approve a Derecho Al Tanto. The law is non-specific regarding the percentage it can charge and every Ejido establishes its own fee. To date, the highest fee I have heard about is as high as 10% of the sales price. It behooves the buyer and the agent to address who pays these fees in the offer to purchase, although, most Ejido sellers will not pay for this process or the Ejido fee. But, it doesn’t hurt to write an offer asking for cooperation.
Since 1992, there is growing support for a re-haul to the Ejido system, close some of its glaring omissions as well as to challenge the law itself including the remaining Ejido land holdings. With the younger generations of Ejidos now leaving the farming communities going to urban centers, the corruption of some commissioners also within Banco Nacional de Crédite Rural (Banrural), the lack of increased expected productivity of the individual Ejiditarian farms, neoliberal economic restructuring and NAFTA, reforms have been made and political Ejiditarian support has significantly weakened. This trend actually precipitated the Chiapas conflict in 1994. A complete and widespread reform or revocation of this law would probably cause widespread unrest. Reforms, if they occur, will be a long and arduous process, so do not look for a major reform soon.
So, can you buy Ejido land? Yes, a specific type of Ejido land you can purchase, as long as you follow all of the legal steps prior to the sale. Be sure and have a Title Search or Agarian lawyer on your team when considering purchasing Ejido property.
By Cheryl T. Miller, Broker, Baja Realty and Investment, serving Los Cabos and the Pacific Coast. Contact her at 624-122-2690, infoforsaleinbaja.com, www.forsaleinbaja.com.